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Friday, April 10, 2015

A National Strategic Reference Framework For Greece!

Ever since I started this blog, I have been arguing that Greece needs to have a plan for its economy and society. Not a fiscal budget; not a Memorandum of Understanding. Instead: something like a Long Term Industrial Development Plan.

When McKinsey came out with their report Greece Ten Years Ahead in early 2012, I was all excited. It may not have been the best plan. Perhaps not even the right plan. But it was a plan!

Subsequently, I was told that McKinsey, in preparing the above document, had very much drawn on work which had been done by the Greek Ministry of Economy and Finance a few years earlier. That didn't surprise me because consultants are known for looking at your watch when telling you what the time is.

"The
progress of the Greek economy depends to a large extent on its ability to
adjust to the international environment, through a powerful and consistent
boost to competitiveness. Within this framework, complex and comprehensive
actions are required to cover a wide range of financial and social life
activities.

The
strategy concentrates on the need to implement policies at national and
regional level, in such a manner that Regions and cities will become attractive
places for business installation, improving at the same time the living
standard of their citizens and reducing inter- and intra-regional disparities.
This new approach relies on policy effectiveness through simplified planning
and implementation mechanisms. The overall objective is to expand the country’s
growth potential, maintain its economic growth rate and increase productivity
at levels higher than the Community average, with the prospect to boost
employment, achieve real convergence and improve the quality of life for all
citizens, with no exclusions whatsoever. In the new programming period 2007 - 2013,
Greece aims at becoming an outward-looking country with strong international
presence, with a competitive and productive economy. A country that will lay
emphasis on education and the young, quality, technology, innovation and
respect for the environment".

I haven't read the 300+ pages of the report but it seems that members of the Greek government should do that with a view towards adapting the plan so that it can serve as a National Strategic Reference Framework 2015-2020.

16 comments:

Like as if you haven´t read the OECD document you pointed to in your previous post (btw: that document along with the McKinsey report are probably (imho) the most important wrintings regarding Greece, by far).

What sense does it make to discuss destinations of a journey, when you still lack the capabilities to organize a crew? When you even do not know, what abilities your crew ought to have/obtain? Let alone the lack of ability/will to establish a naval academy...

When skimming through the Greek document from 2007, the first alarm sign is the type face used on the front page: A type face with shaky and wobbly letters normally used for humoristic or otherwise not too serious subjects...

The part cited by Klaus describes the goals in most noble words, I would tend to say comparable to a pipe dream.

The following paragraphs tells that focusing is required, again by using a lot of correct commonplace lacking the crucial (and controversial) details.

It is no surprising coincidence that the most important objective is placed in the last paragraph where every ordinary reader already is too tired to attentively read:

" Upgrading the institutional environment, simplifying the regulatory framework (reducing red tape) and proceeding to an essential modernization of the public sector..."

And the very last sentence in the last paragraph vaguely says what imho is the most important point:

"... both reforming the legislative & regulatory framework and incorporating the community directives play a dominant role."

However, this again is formulated in the most abstract words possible, so that nobody really understands what it means.

I did not find a single word regarding such trivial prerequisites like "land register" (cadastre), legal stability, financial stability etc. etc.

This kind of beautiful plans reminds me of a new plan for the Swiss school systems. In rosy colors the paradise for teachers and pupils is announced, but only very few sentences explain how it could be realized without taking huge risks. No doubt this Swiss reform will be implemented and a few years later suddenly everybody will be surprised that it must be redone...

Perhaps surprisingly, I agree with your comment. Greece lacks several things that are commonplace in developed societies:(1) a hierarchical structure (of the Weberian sort) that can impose compromise solutions for the good of the country(2) A tradition of civil service competence and responsibility -- for which civil servants can be both penalised and promoted for their actual conduct. In reality, they are promoted for political connections, and cannot be penalised for anything.(3) A social conceptualisation of the public good. Everything is personal or family-based, with some minor extensions to political parties.

With these three (and other social problems) practical issues cannot be addressed let alone resolved, such as the land registry.

Let me give you an interesting (and unknown) incident of how Greek social conduct destroys even external donations from being received. In the mid-1990s, I had a relationship with a major Athens university -- not an employment relationship, though. I had the use of a secretary there. She knew all the gossip and facts. So, I heard that the Athens universities were applying to receive EU funding to set up a national social science library -- sorely needed, because the library provision is pathetic. I was told the name of the major applicants, and was encouraged that this was going to happen. Things started to drag on for over a year, and I asked: what is happening. First response: the EU has agreed to fund it. Then, 6 months later: the Greek professors are fighting, and it looks as if the whole thing will collapse.

Why were they fighting? Apparently, they could not agree on whether to buy a building or rent one, for the library. I expressed astonishment that this was an issue. The reason: several people owned land that they demanded should be bought from them (doubtless at an inflated price) in order to build the new building.

The conclusion? Personal profit comes before professional integrity and the public or national interest. Lest anyone accuse me of being anti-greek, I should point out that this is now the standard practice of most people and politicians in the UK and most of Europe. The mistakes of Greece -- excusable from history -- are now commonplace across Europe, with no excuses.

I liked your comment, so much, till you wrote: "Lest anyone accuse me of being anti-Greek, I should point out that this is now the standard practice of most people and politicians in the UK and most of Europe. The mistakes of Greece -- excusable from history -- are now commonplace across Europe, with no excuses."

How did you get this "information"?Your last paragraph is one big pertinent "heavy caliber" lie.

Back again, because it is incredible what you dare to write: you must have heard something in the Greek media. Why?

Because my personal Greek source told me lately that when listening to the Greek media (Mega, for instance) there is a complete other story about that what happened than the European media are spreading around. The Greek media are NOT reliable.

I am European and know by experience how it is in the European reality. This is something else as what the Greek media try to make Greeks to believe.

You had your Greek experiences from Greeks in Greece itself, your own experience is a source with reality-truth. (=Not theoretical)Your European ideas are based on what you heard, from where, I do not know, but not from any European, unless, maybe, from Balkan countries (I have never been there) and yes, Greece's politics are Balkan politics. Greece belongs to the Balkan, the Greek soul is a Balkan soul (anthropology).

But Europe is so much more than the Balkan countries. If you did not know that then it is time to start to study. Or to visit "us", and get really informed. It would be good to get a reality shower.

@Antoinette. I live in the UK and follow all of European politics and economic developments. I am shocked at the corruption and nepotism in my own country (UK) and see that it is endemic across Europe.

The fact that you do not see what is happening is your problem. We are in a crisis of democracy across Europe, some countries more than others but all are affected. In fact, northern Europe has deteriorated to resemble in many ways the political and economic mess of Greece. This was noted as long ago as the late 1990s, when British expats in Greece referred to the ongoing "Hellenization" of the UK -- referring to the things I mentioned above. This word is unfair, though, because it has nothing to do with the Greeks. The corruption and theatre of European politics is entirely endogenous and relate primarily to the serious economic and political failings of the major political parties across Europe. They have betrayed the vast majority of their electorates, and take up massive salaries in banking and multirnational corporations after leaving office. Corruption? No, far worse -- organised crime that has taken over European and US politics.

You are still in utter and complete denial, that a greek goverment can't a "plan" that has no approval by the troika. It boggles the mind that keep insisting.

McKinsey plan was Samaras' main "plan", only he couldn't have hands loose. IOBE's director, was former ND's finance minister Stournaras, so you may see the irony.

You sound like SYRIZA before the elections: We will take the money from Lagarde's list! Now the SYRIZA minister said that getting money from Lagarde's list is very doubtful because Switzerland considers is an illegally obtained list and won't cooperate because the list is result of theft.

And, if I am not mistaken, I have been saying to you since Day One that you are right in the case of Greece (so far) but not in general. Alexis Tsipras is the best proof that one doesn't have to be an order taker from creditors. In fact, the SYRIZA plan is far above anything else I have seen coming out of Greece which might be considered a plan. Tsipras' problem is that he is now dealing from a very weak hand but if George Papandreou had had a bit of Tsipras in him (which I had wished him at the time), he could have gotten places. I have heard Bill Rhodes in an intereview where he said soemthing like "I urged the Prime Minister that he has to have HIS plan and present it to the creditors instead of presenting the creditors' plans to his voters" but Papandreou, from Day One, felt more comfortable presenting himself as the diplomat. Sometimes I wonder where Greece might be today if Papandreou and Tsipras had formed a team back in early 2010. Papandreou as the sort of hand-shaking CEO and Tsipras as the Chief Operating Officer.

Excuse me, are you joking??? Greece is in paralysis since the elections, because the creditors don't agree with what you call Tsipras' "plan"!!! The private economy has come to a halt, people have withdrawn their money from banks and Greece is eating its flesh, exactly because Tsipras is trying to pass "his own plan". And this situation you want to mean, that it's viable???

Tsipras' current condition, where economists are warning that the country may return in depression, is the absolute proof, of how a goverment can't pass a single law, without constant clash with the troika. Greece is everyday on the news about defaulting every day, Tsipras the rebelious who doesn't want to see reason, Syriza that doesn't have a clear strategy...

And you claim that this is proof of being able to follow a plan!!! My God! Where do you live! Those in SYRIZA that really want to follow their plan, are those who now say "rupture with the EU is the only way". Varoufakis on the other hand, admitted that he will have to compromise.

Papandreou is now past. And he is not Tsipras. This doesn't change the reality today. Tsipras today, has easier conditions than Papandreou. Papandreou was panicked because he had a double digit deficit in his hands. Tsipras, got a primary surplus, which is what allows him to be rebelious today.

And in case you don't know, Stournaras clearly said, when with Hatzidakis they presented a 10 year forward plan in 2013 (based on McKinsey), that they can now start looking at a national plan, because they were now close to primary surplus and the country was gradually gaining market access, making the goverment less reliant on foreign loans.

Just to be more clear, to summarize a bit. Not that it will change anything, but anyway.

Tsipras is trying right now exactly to resist to the creditors imposing THEIR program to him. And make no mistake, if he wants to stay in euro, he will have to succumb. Christine Lagard at the same day says that the poor and medium class paid the crisis. At the same time, she asks, to cut pensions and raise VAT. I am sorry, either i can't understand the logic behind this or in my village, this is called hypocricy! Because a) the VAT is a tax paid the same by the poor and rich , b) the pensioners can't hide anything so they have been the first to be hammered since 2010 and get continuously hammered since then. The third thing that the troika insists in, is not to undo the reforms that brought cheaper labour and elasticity in workforce of private sector. Not what you 'd call rich either.

The reality is this: Greece had to bring down the current account quickly. To do this in such extent and brief time, you have to cut down consumption. To cut down consumption, you must cut down the consumption of the bigger part of the population, not of the few elites, it wouldn't be enough. The alternative would be to raise the productivity in no time, but there is no way to do that, while there is a havoc in private sector, with businesses shutting down like in a domino effect and the depositors drying out the banks, either because they need money to live or pay loans or because they are simply afraid of grexit.

But for the press and the people, let's say how sorry we are that the poor paid for the crisis.

I don't know what SYRIZA will have to accept, but, make no mistake. Whatever is imposed to them contrary to SYRIZA's program or ideology, will NOT be "Tsipras'" plan. They will HAVE to do it somehow. Nobody in SYRIZA really believes in privatizations. They will be forced to do whatever they have to.

Greece will never recover, unless people feel a relative safety again. When even greek businessmen are afraid to make an investment, because there is no certainty on whether Greece will be in euro or not, how can a foreigner do an investment, unless he has a very secured investment of strategic importance?

In this period that Tsipras is trying to fight for his plan (and he will lose the fight), greek exporters are again in the position they were in 2010. Foreigners ask them for cash. They want warranties from foreign banks and so on.

You can do all the cuts and reforms you like. As long as a country is in a limbo between 2 currencies, the country will keep dragging itself on the bottom of the pit.

You are liberal in economics, right? How about this. You will not be allowed to post in your blog anymore, unless you change 50% (being generous) of your positions, to a comunist stance. Your articles will be approved by me from now on. If you agree on the terms, you will be allowed to post and you will call this blog "yours". For starters, i want to you to praise George Papandreou. This is a compromise you must make for good will.

You know, Klaus is a retired but experienced international banker. I have no doubt that in his professional life he had to agree to a few contracts of the style you can not imagine happening a single time...H.Trickler